Farm­ing sec­tor ‘ro­bust’

Midwest Times - - NEWS - Adam Poulsen

Af­ter a chal­leng­ing 2017 sea­son for Mid West farm­ers, there was a pos­i­tive feel­ing in the room at the Plan­farm Bankwest Bench­marks launch in Ger­ald­ton last Wed­nes­day.

The Bench­marks is a lead­ing an­nual re­port into the fi­nan­cial and pro­duc­tion per­for­mance of broad­acre farm busi­nesses across WA.

Its find­ings come from a sur­vey of 550 Plan­farm, Bankwest, Busi­ness Ag, AgAs­set, and Bed­brook John­ston Williams clients.

The re­port found WA farm­ers had a tur­bu­lent 2017 sea­son, with sum­mer rain­fall triple the 10-year-aver­age, fol­lowed by one of the dri­est starts to the sea­son in the past 10 years.

This was fol­lowed by a dry au­tumn and an early win­ter, and good rain­falls in spring.

The favourable spring weather al­lowed farm­ers whose crops had not been sig­nif­i­cantly dam­aged to achieve close to aver­age pro­duc­tion, while some achieved ex­cep­tional pro­duc­tion lev­els.

Yields of wheat, lupins and bar­ley re­mained above the 10-year aver­age, the re­port found.

“Aside from canola, for which pric­ing re­mained high for much of the year, pric­ing for all ce­real grains re­mained per­sis­tently low un­til af­ter har­vest,” it said.

“Wool and sheep prices, on the other hand, con­tin­ued to rise to their high­est lev­els in re­cent me­mory.

“Strong re­turns for wool and sheep, along with a very dry start, saw farm busi­nesses that have live­stock al­lo­cate a five-year high 29.3 per cent of their land to sheep and wool in the year to Fe­bru­ary, 2018.

“Greater volatil­ity in the 2017 pro­duc­tion year was il­lus­trated by the largest dif­fer­ence in re­turn on cap­i­tal be­tween the top 25 per cent and bot­tom 25 per cent of farm busi­nesses in 10 years, of 12.2 per cent and -3.6 per cent re­spec­tively.”

The re­port also found farm eq­uity re­mained sta­ble in 2017 at 79.4 per cent.

Speak­ing at the launch, Plan­farm farm man­age­ment con­sul­tant Rob Grima said agri­cul­ture was a “volatile” but “very ro­bust” in­dus­try.

“There is money to be made, and it’s a great in­dus­try to be in­volved in,” he said. “That’s some­thing we should all be singing from the rooftops to try and get more youth into our in­dus­try to take up the po­si­tions that are re­quired to be taken up.”

Mr Grima said af­ter re­ceiv­ing 200mm of rain in Jan­uary and Fe­bru­ary, fol­lowed by dis­ap­point­ing falls un­til late July, Mullewa farm­ers had a “rea­son­able yield” af­ter re­ceiv­ing a to­tal 400mm over the en­tire sea­son.

He said Mullewa showed great po­ten­tial.

“Not many want to move to the low rain­fall ar­eas such as Mullewa, but if you were an alien land­ing on Earth right now and you had money to in­vest in agri­cul­ture, where would you get the best re­turn for your in­vest­ment? Out there,” he said.

Mr Grima said Min­genew re­ceived less sum­mer rain­fall but a sea­son to­tal of 350mm.

“In that mid­dle-of-May pe­riod, they man­aged to eke out maybe 20mm of rain, and there were crops that came out of the ground — although they didn’t look great,” Mr Grima said.

“They were thirsty, but they were out of the ground and (farm­ers) had some­thing to play with.

“But af­ter a long pe­riod of small amounts of rain, there was 100200mm in a very small space of time.

“And the crops were ac­tu­ally . . . busi­ness as usual for those farm­ers, by and large.”

Ac­cord­ing to the re­port, strong re­turns in the past 10 years showed the strength of WA’s broad­acre farm­ing in­dus­try, with the re­turn on cap­i­tal of 5.2 per cent in 2017 slightly below the 10-year aver­age of 5.5 per cent. “We had a much bet­ter re­turn on cap­i­tal across the whole State last year; eq­uity im­proved marginally; our op­er­at­ing costs were slightly lower as a per­cent­age of gross farm in­come; and our op­er­at­ing profit as a re­sult has in­creased sub­stan­tially for the whole of the State,” Mr Grima said.

Pic­tures: Adam Poulsen

Bankwest head of ru­ral and re­gional bank­ing Greg O'Brien said 2017 had been a pos­i­tive year marked by chal­leng­ing con­di­tions and in­creased use of new tech­nol­ogy.

Plan­farm farm man­age­ment con­sul­tant Rob Grima said the agri­cul­ture in­dus­try was "volatile" but there was plenty of money to be made.

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